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Perez v. Travelers Insurance (2005-104)
2006 VT 123
[Filed 17-Nov-2006]
NOTICE: This opinio-n is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
2006 VT 123
No. 2005-104
Georgina Perez Supreme Court
On Appeal from
v. Addison Superior Court
Travelers Insurance as Insurer for February Term, 2006
Ames Department Stores, Inc.
Helen M. Toor, J.
Ronald A. Fox of Biggam Fox & Skinner, Montpelier, for Plaintiff-Appellant.
William C. Dagger of Dagger Law Offices, Woodstock, for Defendant-Appellee.
PRESENT: Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.
1. JOHNSON, J. Claimant in this workers' compensation case
appeals the superior court's decision denying her request for attorney's
fees and awarding only a portion of her costs. We affirm in part, reverse
in part, and remand for further proceedings.
2. Claimant prevailed on her workers' compensation claim before
the Commissioner of the Department of Labor & Industry, and prevailed again
when defendant appealed the Commissioner's decision to the superior court.
See 21 V.S.A 670 (permitting appeal to superior court in workers'
compensation cases). The workers' compensation statute provides that a
claimant who prevails in an appeal to superior court "shall be entitled to
reasonable attorney's fees as approved by the court." 21 V.S.A. 678(b).
Accordingly, claimant submitted a motion for fees and costs.
3. In her motion, claimant set forth the statutory basis for the
award and argued that the award should be calculated using the "lodestar"
approach-multiplying the number of hours her attorney expended on the case
by a reasonable hourly rate, and then adjusting that figure based on
consideration of factors such as the difficulty of the legal issues in the
case and the result obtained. See L'Esperance v. Benware, 2003 VT 43,
22, 175 Vt. 292, 830 A.2d 675 (explaining "lodestar" method of calculating
attorney's fee award). The requested fees totaled $19,460.00, or 111.2
hours at $175 per hour. In support of the number of hours worked, claimant
attached an affidavit from her attorney as well as her attorney's itemized
billing records for the relevant time period. In support of a billing rate
of $175 per hour, claimant attached affidavits from two other attorneys in
private practice in Vermont with similar levels of experience, (FN1) who
listed hourly rates for litigation at $175 and $250 per hour, respectively.
Finally, claimant attached an invoice for various costs incurred in the
case, totaling $4,893.12.
4. Defendant offered several arguments in opposing claimant's
request. First, defendant argued that claimant's recovery of attorney's
fees was limited to the amount owed her attorney under the contingent fee
agreement ($6,176.25). Second, defendant argued that the requested rate of
$175 per hour was not reasonable. Defendant asserted that claimant was
required to provide supporting affidavits from practitioners who
specialized in workers' compensation cases rather than in litigation,
generally. As an alternative, defendant proposed that the fee award be
calculated at a rate of $90 per hour-the rate mandated by Workers'
Compensation Rule 10 for fee awards arising from proceedings before the
Commissioner. See 21 V.S.A 678(a) (providing for award of attorney's
fees for proceedings before Commissioner where claimant prevails).
Regarding the number of hours expended, defendant's only argument was the
bare assertion "that 111.2 hours of professional time for involvement in
preparation and trial of this claim is excessive and out of proportion to
the issue and amount involved." Finally, defendant argued that, while
costs were recoverable under 678(a) for proceedings before the
Commissioner, they were not authorized by 678(b), which pertains to
proceedings in superior court. Defendant's opposition was not supported by
affidavits or other evidence bolstering the contention that there was a
different market for attorneys who specialized in workers' compensation
practice. Neither did defendant offer its own billing records for
comparison regarding the number of hours expended on the litigation, nor
identify individual time entries by claimant's attorney that were unrelated
to the litigation or redundant.
5. In its decision on claimant's request, the superior court
acknowledged that "[t]here is no question that [claimant] is entitled to an
award of reasonable attorney's fees," but denied claimant's request
nonetheless, concluding that claimant had failed to "adequately establish[]
that [her] claimed fees are reasonable." Specifically, the court faulted
the attorney affidavits because they were not confined to workers'
compensation practice, but addressed rates for litigation generally. The
court concluded that there was "no basis on which to determine what a
reasonable hourly fee should be in this type of case." The superior court
further criticized the fact that some of the time entries were vague and
failed to describe the purpose of various activities. The superior court
cited In re S.T.N. Enterprises, 70 B.R. 823, 833 (Bankr. D. Vt. 1987), for
the proposition that "[i]t is incumbent upon counsel who plan to seek fees
to keep detailed billing records reflecting precisely what their time is
spent on." In light of these deficiencies, the superior court did not
merely reduce the requested amount, but denied all of claimant's requested
attorney's fees outright. The superior court granted claimant's request
for costs in part, concluding that claimant was not entitled to all the
costs covered by 678(a), which only applies to proceedings at the
administrative level, but that claimant could recover those costs routinely
allowed in civil cases under V.R.C.P. 54(d) and 32 V.S.A. 1471.
6. Claimant filed a motion to reconsider the ruling, arguing
that V.R.C.P. 54(d)(2)(D) required the court to hold an evidentiary hearing
or appoint a special master on the issue of attorney's fees. Claimant
further argued that the submitted billing records and affidavits provided a
sufficient basis for an award, but offered to provide additional detail to
the billing records (by returning to look at notes and records made at the
time) and to obtain additional affidavits from workers' compensation
attorneys. The superior court denied the motion for reconsideration,
concluding that claimant was simply seeking "a second bite of the apple,"
and that the additional evidence claimant proposed to offer could have been
presented with the initial motion. The court reiterated its conclusion
that the statute did not permit the recovery of all of claimant's costs,
although the court did grant claimant's request on reconsideration that
certain deposition costs be included. Claimant filed a motion to review
the ruling on reconsideration, to which she attached a detailed and lengthy
affidavit from a personal injury and workers' compensation attorney who
reviewed the billing records in claimant's case and concluded that both the
hours expended and the rate of $175 per hour were reasonable. This
attorney further opined that the level of specificity in the attorney's
time entries reflected "common billing practices for claimant lawyers in
workers' compensation law in Vermont." The court denied this motion as
well, citing the reasons stated in its ruling on the motion for
reconsideration.
7. On appeal, claimant argues that the superior court erred in
applying an overly strict and inapposite standard to claimant's
documentation of her attorney's fees. Alternatively, claimant argues that
if the heightened standard applies, the superior court should have allowed
claimant to supplement her supporting documentation to meet that standard.
Claimant also argues that the superior court erred in concluding claimant
was not entitled to recover certain of her costs.
8. While the superior court has substantial discretion in deciding
the amount of an attorney's fee award, see Electric Man, Inc. v. Charos,
2006 VT 16, 6,17 Vt.L.Wk. 51, 895 A.2d 193, the decision whether to award
fees is more closely guarded. Vermont follows the "American Rule" of
attorney's fees, under which parties to litigation are generally
responsible for their own fees in the absence of a statute or agreement to
the contrary. See Monahan v. GMAC Mortg. Corp., 2005 VT 110, 76, 16
Vt.L.Wk. 339, 893 A.2d 298. Departure from the "American Rule" is
permitted only in exceptional circumstances. Id. Where there is a
statutory fee-shifting provision, however, an award is mandatory. See,
e.g., Electric Man, 2006 VT 16, 6. Accordingly, we conclude that the
district court abused its discretion in denying all fees where claimant was
admittedly entitled to a fee award by statute and where a reasonable award
could have been determined on the evidence presented.
9. In the context of applying the attorney's fee provision of
the Consumer Fraud Act, we have held that where a party is entitled to
attorney's fees by statute, "it is not within the court's discretion
whether to award such fees, but rather its task is to determine what
constitutes reasonable fees in each instance." L'Esperance, 2003 VT 43,
22 (citing Gramatan Home Investors Corp. v. Starling, 143 Vt. 527,
535-36, 470 A.2d 1157, 1162 (1983)). We noted in Gramatan that the purpose
of the attorney's fee provision of the consumer fraud laws was to
"encourage prosecution of individual fraud claims." Id., 143 Vt. at 536,
470 A.2d at 1162. In light of this policy purpose, we concluded that the
superior court did not have discretion to deny an award outright. Id., 143
Vt. at 535, 470 A.2d at 1162. Similarly, the attorney's fee provision at
issue in this case shifts the burden of fees to the employer "to discourage
unreasonable delay and unnecessary expense in the prosecution or defense"
of workers' compensation claims. Morrisseau v. Legac, 123 Vt. 70, 79, 181
A.2d 53, 59 (1962) (describing "main purpose" of fee shifting under
workers' compensation statute); see also Hodgeman v. Jard Co., 157 Vt. 461,
465, 599 A.2d 1371, 1373 (1991) (noting that 678(a) shifts fees "because
employers and their insurance carriers are better able to bear the expense
of hearings than employees"). In light of the purposes of the fee-shifting
provision, the superior court should have adjusted the amount that claimant
requested to reflect a reasonable award under the circumstances rather than
denying fees outright. (FN2)
10. Generally, in determining what constitute reasonable
attorney's fees, courts should begin with what is referred to as the
"lodestar" amount: "the number of hours reasonably expended on the case
multiplied by a reasonable hourly rate." L'Esperance, 2003 VT 43, 22.
From this starting point, the court can "then adjust[] that fee upward or
downward based on various factors," including "the novelty of the legal
issue, the experience of the attorney, and the results obtained in the
litigation." Id. Here, claimant submitted an itemized billing statement
and affidavits from other attorneys providing a range of comparable billing
rates. There was adequate evidence from which the superior court could
have fashioned an award. See, e.g., id. 28 (affirming award of fees
based on itemized billing statement and attorney affidavit supporting
reasonableness of fees).
11. Nonetheless, the superior court concluded that it could not
determine whether claimant's attorney had spent a reasonable number of
hours on the case because the attorney's time entries were too vague. In
reaching this conclusion, the court relied on S.T.N. Enterprises, a
decision from the federal bankruptcy court. In that case, the party
seeking attorney's fees was held to a very high standard of detail and
accuracy in the submitted billing records. For example, the bankruptcy
court required that a time entry for a telephone call "describe the
substance of the communication, explain its outcome, and justify its
necessity." Id., 70 B.R. at 833. Further, under rules specific to
bankruptcy proceedings, "[t]he time listed should be scrupulously accurate,
and may not be billed in increments greater than one-tenth of an hour for
professional services, nor one-twentieth (three minutes) for telephone
calls." Id. at 832.
12. The standards applied in S.T.N. Enterprises are not
applicable to attorney's fee awards under state law in Vermont. The
context of an attorney's fee award in bankruptcy is very different: in
bankruptcy proceedings, fees are not paid by the opposing party but by the
estate, requiring the court to exercise greater oversight of billing
practices. Id. at 832. Accordingly, "an attorney representing a debtor
in Chapter 11 must obtain prior approval of the Court" for services
performed and "[t]he Court will disallow any compensation to attorneys who
provide services without the Court's prior approval." Id. at 831. Thus,
the award of fees in the context of federal bankruptcy proceedings
presents an entirely different set of concerns unique to that context. The
standard of "hours reasonably expended on the case" necessarily
incorporates a requirement that the work was in furtherance of the case.
We see nothing lacking in our established rule.
13. For purposes of an award of attorney's fees under Vermont law,
the touchstone is reasonableness. See Human Rights Comm'n v. LaBrie, Inc.,
164 Vt. 237, 250, 668 A.2d 659, 668 (1995) ("Fee awards are to be
reasonable, reasonable as to billing rates and reasonable as to the number
of hours spent in advancing the successful claims.") (quotation and
citation omitted). Accordingly, time entries must be accurate and allow the
court to assess whether the work performed was related to the litigation at
issue, but they need not reach the level of detail and justification
required in federal bankruptcy proceedings. The superior court at most
should have reduced the fee award only by the specific number of hours
listed for entries that the court concluded were not reasonably related to
the litigation or redundant.
14. Regarding a reasonable hourly rate for claimant's attorney,
(FN3) the standard is relatively flexible and requires only that the party
seeking fees provide a basis for comparing the rates requested to
prevailing rates. See Fine Foods, Inc. v. Dahlin, 147 Vt. 599, 605, 523
A.2d 1228, 1232 (1986) (noting there is no fixed standard for determining a
reasonable rate and listing factors to be considered, including prices
charged by other attorneys for similar services and in the same vicinity).
Here, the superior court adopted defendant's argument that claimant was
required to present supporting affidavits from practitioners specializing
in workers' compensation cases. Defendant did not offer any evidence
suggesting that a practitioner specializing in workers' compensation law
would be compensated differently from another litigator. The unchallenged
evidence was that practitioners with a similar background and level of
experience as claimant's attorney charged between $175 and $250 an hour.
(FN4) Furthermore, these attorneys practiced personal injury law, as did
claimant's attorney, which is a practice area logically related to workers'
compensation. While the superior court had broad discretion to choose a
reasonable rate, it was error to conclude that no reasonable rate could be
determined in light of this evidence.
15. Besides the fact that claimant submitted affidavits in
support of her requested billing rate-which defendant did not meet with
counter-affidavits-defendant also conceded that the statutory rate of $90
per hour (mandated by rule and used to calculate awards at the
administrative level) would be reasonable. Ordinarily such a concession
would at a minimum establish the low end of the range of reasonable billing
rates, but we have previously recognized that attorney's fee awards in
workers' compensation claims before the superior court should not be
limited to the rate established by Rule 10. See Jackson v. True Temper
Corp., 156 Vt. 247, 249-50, 590 A.2d 891, 893 (1991). This distinction in
billing rates for the different levels of proceedings is well-founded.
While proceedings at the administrative level are relatively informal, in
that they are not subject to evidentiary and other rules, proceedings in
the superior court employ the full panoply of litigation skills. Further,
workers' compensation cases require specialized skills related to
presentation of medical claims, which are uniquely dependent on technical
evidence. In light of this, it is appropriate to consider prevailing
market rates for trial litigation-in particular litigation where the
plaintiff's medical condition is the crux of liability-as a starting point
for the fee award. In presenting affidavits from attorneys with similar
levels of experience and who practiced in personal injury law, claimant
addressed the relevant standard.
16. Claimant's submissions were adequate to provide the superior
court with a basis to calculate a reasonable fee award in light of her
unquestionable entitlement to such an award. We need not reach the issue
of whether claimant was entitled to a hearing to present evidence tailored
to the more stringent standard of S.T.N. Enterprises as we have held that
the standard did not apply.
17. We do not find persuasive defendant's argument, made in
passing, that claimant's award should be limited to the terms of the
contingency fee agreement she entered into with her attorney. In the
context of attorney's fee awards in civil rights litigation, we have held
that the award to a plaintiff should be based on prevailing market rates,
not the amount that the plaintiff actually paid to his or her attorney (in
that case a nonprofit organization). LaBrie, 164 Vt. at 250, 668 A.2d at
668. Similarly, applying the "lodestar" method of calculation here
"represents the reasonable worth of the services rendered in vindication"
of claimant's position, and is therefore appropriate given the statute's
goal of alleviating the cost of litigation for prevailing claimants. Id.
(internal quotations omitted).
18. Claimant also argues that the superior court erred in
concluding that 678(b) does not entitle a claimant to recover costs in
superior court. Because this ruling rests on interpretation of a statute,
we review it de novo. Heffernan v. Harbeson, 2004 VT 98, 7, 177 Vt.
239, 861 A.2d 1149. There is no basis in the statutory language for
awarding costs in superior courts or the Supreme Court beyond those
normally allowed under V.R.C.P. 54(d). While 678(a), which applies to
the administrative level of workers' compensation proceedings, provides
that "[n]ecessary costs of proceedings under this chapter shall be assessed
by the commissioner against the employer or its workers' compensation
carrier when the claimant prevails," there is no similar statement in
678(b), the provision applicable to proceedings before the superior court.
The decision of the superior court is affirmed in part, reversed in part
and remanded for further proceedings consistent with this opinion.
FOR THE COURT:
_______________________________________
Associate Justice
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Concurring and Dissenting
19. BURGESS, J. concurring in part and dissenting in part. I
agree that the issue of attorney's fees should be remanded, but only for a
partial award at the undisputed statutory rate. While the trial court was
correct in its assessment that some of the fees sought were inadequately
supported, other times and activities described in the "Time Entry Report"
submitted in support of claimant's Motion for Attorney's Fees appear
reasonable on their face. For example, it is undisputed that this case
involved a two day trial preceded by part of a day in jury draw, plus
travel. The aggregate twenty-six hours reported as spent in those
endeavors seem reasonable and are not contested.
20. Other entries, however, were not so apparently necessary.
The trial court specifically found that it could not determine, from the
utter lack of information provided, the relevance to case preparation of
some of the time and work reported. Among other unsubstantiated items
noted by the court were frequent entries for "file review" not reported in
connection with any particular proceeding, pleading, or purpose, and a
number of phone calls from the client, all amounting to over eight hours,
without any indication whatsoever as to why these activities were
necessary.
21. The majority reasons that the claimant's entitlement to
"reasonable attorney's fees" is at odds with the trial court's proposition
that counsel seeking an award of fees should keep detailed and precise
billing records. The majority finds this standard, borrowed from
bankruptcy law, overly demanding for workers' compensation claims, but does
not overcome the trial court's plain logic that, just because an activity
occurred and is recorded does not "automatically" make it, as a matter of a
prima facie showing, necessary to the litigation. Even if the bankruptcy
standard is too stringent, it was still no abuse of discretion for the
trial court to reject the wholly unexplained entries as not supported by
any evidence. See Hodgeman v. Jard Co., 157 Vt. 461, 466, 599 A.2d 1371,
1374 (1991) ( "The determination of 'reasonable attorney fees' lies within
the commissioner's discretion, but counsel has the burden of providing
evidence to justify an award.").
22. It was not an abuse of discretion for the trial court to
reject claimant's proffered hourly rate of $175.00. In her Motion for
Attorney's Fees, claimant asserted that workers' compensation litigation is
a "niche" practice, and that few attorneys take cases, like the instant
one, to trial before the superior court on appeal de novo. Claimant
conceded, in her Motion for Reconsideration, that she could have obtained
affidavits about comparable hourly rates from other workers' compensation
practitioners. Instead, claimant submitted affidavits of two attorneys,
prepared for an entirely different case, who described their respective
practices as personal injury, wrongful death, commercial litigation and
white collar defense at an hourly rate of $250.00 for one; and civil,
family, personal injury and criminal defense at an hourly rate of $175.00
for the other. Except that both affiants and claimant's counsel practiced
"litigation" for approximately the same number of years, neither the motion
nor the affidavits recite any substantial similarity between counsel's
niche practice and the areas of litigation described in the affidavits.
23. "Litigation" is not a particularly clarifying descriptor. Any
court proceeding involving contested evidence and legal rulings is
litigation, but does not necessarily warrant an hourly rate of $175.00.
The similarity claimed here was so broad as to be uninformative. Counsel
and the attesting attorneys might as well have simply declared that they
all practiced law in court. Nothing in the motion or in the affidavits
indicated the comparative demands and complexities of this case and
counsel's practice to the practices of the attesting attorneys.
24. We know there are dissimilarities. For example, litigation
over personal injury, wrongful death and criminal culpability typically
involves legal and factual issues of fault, while the right to workers'
compensation is a matter of strict employer liability. Personal injury
litigation can involve products-liability disputes over design,
engineering, and manufacturing, while workers' compensation does not.
Other civil and commercial litigation generally addresses disputes
concerning interpretation and enforcement of deeds, contracts, leases, and
debt, while workers' compensation law does not. Family court litigation
focuses on dissolution and redistribution of families and their estates,
all of which is foreign to workers' compensation practice. The litigation
in the instant case could have been more or equally difficult than what is
summarily categorized by the attorneys, but there is no reason to presume
so based on the motion and the affidavits.
25. The majority is correct that claimant was entitled to
attorney's fees, but the right does not make the proof. There is no fixed
formula to determine the reasonableness of attorney's fees, but "several
factors must be considered," including "the nature and importance of the
business, . . . the usual prices charged by other attorneys for similar
services in the same vicinity, . . . the importance of the matter, and the
responsibility assumed and carried." Fine Foods, Inc. v Dahlin, 147 Vt.
599, 605, 523 A.2d 1228, 1232 (1987) (emphasis added). Nothing in the
motion, or in the affidavits, touches on those topics. Absent evidence on
those factors, it would have been error for the court to adopt an hourly
rate of $175.00 as part of the lodestar figure advised by the majority.
Id. (rejecting an award of attorney's fees when plaintiff failed to
introduce evidence of reasonableness, and observing that "[e]vidence of
this sort was not available to the court in the instant case because none
was admitted"). Claimant failed to submit the evidence necessary to prove
her point. (FN5)
26. I respectfully dissent from that portion of the remand
requiring the court to set a reasonable hourly rate above the $90.00
statutory rate, and from the holding that compensable attorney's fees
include time spent on activities merely relating, but not claimed or
recorded in a manner reflecting reasonable necessity, to the litigation at
issue. I concur in remanding for a calculation of attorney's fees, but at
the conceded statutory hourly rate of $90.00 for those entries that can be
determined as reasonably necessary to the litigation at issue.
_______________________________________
Associate Justice
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Footnotes
FN1. One affiant has twenty-eight years of experience as an attorney,
practices personal injury law, and charges $175 per hour for litigation
services. The other affiant has thirty years of experience as an attorney,
had served as an Assistant U.S. Attorney between 1973 and 1981, practices
personal injury law, and charges $250 an hour for all types of litigation.
Claimant's attorney has twenty-eight years of experience as an attorney,
had served as a Deputy State's Attorney and Assistant Attorney General
between 1973 and 1977, and practices personal injury law.
FN2. While the dissent implies that claimant's entitlement to fees is not a
sufficient basis for reversing the superior court's decision to make no
award whatsoever, see post, 21, the dissent at the same time concedes
that some form of appropriate award could have been fashioned on the basis
of the evidence submitted. Thus, we are not faced today with a situation
where a litigant is entitled to an award, but there is truly no basis for
determining the amount of the award. Rather, the abuse of discretion
occurred when the trial court did not attempt to find any reasonable rate.
The trial court has broad discretion to set the rate as long as it is
reasonably grounded in the evidence before it. Here, the evidence was
disregarded for an untenable reason.
FN3. The dissent states that "[i]t was not an abuse of discretion for the
trial court to reject claimant's proffered hourly rate of $175.00." Post,
22. In fact, we do not conclude that this was an abuse of discretion.
Rather, the abuse of discretion occurred when the trial court did not
attempt to find a reasonable middle ground between claimant's proposed rate
of $175.00 per hour and defendant's conceded rate of $90.00 per hour.
FN4. The dissent emphasizes that the affidavits claimant submitted in
support of a proposed hourly rate of $175.00 were "for an entirely
different case." Post, 22. We note that defendant did not make any
argument that workers' compensation litigation before a superior court
differed materially from other forms of litigation, and there is nothing in
the record to support this conclusion. While the precise subject matter of
the litigation may vary, professional experience is an important element of
a reasonable hourly rate, and therefore affidavits from attorneys with
comparable levels of experience provide some useful guidance.
FN5. The majority explains that $175.00 per hour is not necessarily the
reasonable rate to be employed by the trial court in awarding attorney's
fees, and expects the court to divine a rate between the agreed-upon floor
of $90.00 and the unsubstantiated ceiling of $175.00. There was no other
evidence presented, however, of prevailing rates for the court to consider,
and no suggestion that the trial judge was independently familiar with
lawyers' rates prevailing in these kinds of cases. On the same lack of
evidence, this Court could decree a hourly rate just as inaccurately as the
trial court, without the trouble of remand. |